Equities: AI-driven support with regional tilts – HSBC

HSBC’s global CIO team keeps an Overweight six‑month view on global equities, supported by AI‑related opportunities and resilient earnings. They favour the United States, Japan and Asia ex‑Japan, while staying Underweight Europe ex‑UK and Neutral on Emerging Markets overall. Sector-wise, they highlight Industrials, Communications, Materials and Utilities, and downgrade Consumer Discretionary on weaker sentiment and higher energy costs.

Overweight global, US, Japan and Asia ex-Japan

"While market uncertainty persists, the fundamental backdrop for global equities remains supportive. With AI broadening opportunities across sectors and regions, we continue to diversify beyond the US and technology to reduce concentration risk."

"[Japan] Wage growth and fiscal expansion should boost consumption and economic activity, supporting a further domestically driven re-rating of the stock market. Corporate governance reforms continue to drive shareholder value."

"Asia ex-Japan equities are supported by cyclical earnings growth and investors chasing quality dividends. Favourable policy measures, expanding AI ecosystems, and structural reforms offer compelling diversification and innovation opportunities."

"While fundamentals remain resilient, the [EM] region’s exposure to higher-for-longer energy prices could drive inflation higher, disrupt supply chains and soften global economy activity. We maintain a neutral position."

"We downgrade the [Consumer Discretionary] sector in Asia and globally, reflecting declining consumer sentiment, as the macroeconomic impact of the Middle East conflict leads to softer discretionary spending. We expect ultra-luxury demand to remain resilient. Airlines and travel companies are already raising prices to offset higher fuel costs, which may weigh on demand. The hospitality segment is showing signs of reduced bookings. In contrast, electric vehicle demand has risen sharply in many markets, as consumers seek to mitigate higher fuel prices."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)